|Mon July 9 2012 14:28:35|
In Renaissance of Payment Services, Look to Needs of Small Seller
By: Ina Steiner
Remember Billpoint, BidPay, Certapay, Citibank c2it, Cybercash and Yahoo PayDirect? Many companies were trying to succeed in the online payments space a decade ago, but many of them soon abandoned the space, leaving small sellers few options for accepting payments for online purchases, the most popular being PayPal or merchant credit card accounts.
That expansion of online payment services is happening again thanks to mobile shopping and, just as before, contraction is likely to follow. Former New York Times reporter Miguel Helft is now covering Silicon Valley for Fortune magazine, and today he wrote an in-depth piece on mobile payments, which he called a free-for-all in which "everyone wants in," from big phone companies to credit card networks to tech giants to startups as well as traditional banks, retailers, and makers of point-of-sale hardware.
The reporter spent some time with Square's Jack Dorsey (whom he says is often compared to Apple's Steve Jobs) and discusses its service called Register, a point-of-sale system for brick-and-mortar retailers that also allows retailers to "keep track of their customers and inventory (think lightweight enterprise software) and to offer loyalty deals and discounts (think Groupon but better targeted). Register also delivers analytics that tell merchants what their customers buy and when they buy it - the kind of data that, until now, only large offline retailers could afford to track."
It's interesting to observe the propensity of small businesses to embrace innovation and for larger companies to avoid risk. Large brands were wary of eBay in the early days - the marketplace succeeded because of many micro sellers. PayPal, which is now embracing retail chain stores such as Home Depot with its point-of-sale offering, succeeded because of micro sellers such as those on eBay.
Square has gained traction because it offered micro sellers the ability to easily swipe credit cards using its easy-to-carry card reader that came with a pay-as-you-go plan for small merchants. As Helft notes, "hairdressers, piano teachers, cabbies, and even babysitters" are using Square's initial card-reader offering.
The Fortune article summarizes what we've been hearing about digital wallets: "Not only will the phone or the tablet become a wallet for consumers, but it will also turn into a credit card reader and a register for merchants. Shoppers will use their mobile device as a coupon book, a comparison-shopping tool, and a repository of those unwieldy loyalty cards they carry from everyone from giant retail chains to the corner bakery. And your smartphones will serve as beacons that will alert a retailer when you walk into its store so that it can recommend products, show you reviews, or direct you to aisle five, where that beanbag chair you didn't buy last week still beckons - and you can now have it for 10% off. You won't even need a few singles to tip the valet or pay the dog walker, because they'll take mobile payments too."
However, Helft predicts, "retailers and their partners will have to offer mainstream shoppers some pretty sweet perks to get them to replace a swipe of a plastic card with a tap of a phone."
If you're in the online/mobile payments space or want to learn what the future of payments might look like, this is a must-read article. Let us know what you think, and what you'd like to see in your "digital wallet" both as a shopper and as a merchant.